Furlough extended to cover new lockdown

The government has extended the furlough scheme until December 2nd to cover the wages of people unable to work because of restrictions imposed by the new lockdown.

The decision was made just hours before the first furlough was due to expire, guaranteeing 80% of the wages of anyone unable to work and is more generous to the employers.

Whole

Under the new scheme the government will pay the whole of the 80% of salary instead of just 60% with the employer paying the extra 20%.

All the employer will have to fund is the National Insurance and any pension contributions the employee may be entitled to.

The new furlough replaces the planned, less generous Job Support Scheme (JSS) under which workers forced to work part time because their employers did not have enough work for them would only receive 67% of their normal wages for the hours not worked.

Two million

Around 10 million workers were furloughed at the start of the pandemic, but their number has gradually dwindled as firms started work again as restrictions were lifted. However, it is understood that there are still two million off work – a figure which us likely to rise as pubs, restaurants, gyms and non-essential shops have been forced to close their doors under the new lockdown.

Announcing the new measures Prime Minister Boris Johnson said he was ‘under no illusions’ how hard the new restrictions would be for firms which had already suffered so much this year.

Qualify

To qualify for the extension employees must have been on the payroll by October 30th, but they need not have been furloughed previously.

Employers have been allowed to bring back workers part time since July and furlough them for the rest. These arrangements can continue.

Extras for firms

The government will also give firms:

  • Up to £3,000 per month under the Local Restrictions Support Grant if their premises is forced to close
  • £1,000 for every furloughed employee kept on until at least the end of January
  • £1,500 for every out-of-work 16-24 year-old given a ”high quality” six-month work placement
  • £2,000 for every under-25 apprentice taken on until the end of January, or £1,500 for over-25s

Extra help for self-employed

Help for the self-employed is to be doubled as they can now claim 80% of trading profits for the duration of the extended scheme rather than the 40% available before.

Businesses can still apply for government-backed support loans until the end of January, an extension of the previous November 30th deadline.

Criteria

But because the qualifying criteria for grants remains the same as before up to 2.9 million freelancers, contractors and newly self-employed people would remain excluded.

Though the Association of Independent Professionals and the Self-Employed (IPSE) said the new measures will give ‘vital support’ to many workers, it accused the government of still ‘wilfully ignoring a third of self-employed’.

What will happen post lockdown?

When the extension ends on December 2nd, regions will be classed into tiers as before, based on their Covid risk level, and the Job Support Scheme will start with workers receiving up to 67% of their wages if a business is forced to close because of local restrictions. Firms will not have to pay towards this salary.

If firms can stay open but can only offer part time work employees will receive 73% of their wages split between payments by the firm and the government.